2016-04-27

It's a half tongue-in-cheek quiz and half serious question...of course the answer is clear. Rachel Arab and Shiny Pony are conspiring to steal hundreds/thousands/tens of thousands of your dollars away from you (and they're conspiring with faggy and fag-loving city mayors to steal even more).

Unlike payday loan houses, you can't go up to the government counter, hear how much they plan on taking from you, say "no thanks", and just go home without ponying up the extra cash. They rob you right from your paycheque. Payday loan looks like a step up from payday larceny.

Far-left extremists should be the last people to make a stink about Money Mart. The mote in the eye of a payday loan company is insignificant compared to the beam in the eyes of socialists. Likewise, how does this phrase being used by the CBC against payroll loan company not apply 1000% more to Rachel Arab's government?

Such access to money, however, comes at a cost. Consumer groups say the interest rates charged by payday lenders- typically as high as 600 per cent on an annualized basis - can leave borrowers trapped in crippling cycles of debt.

Taxpayers are trapped in crippling cycles of debt†. When will there be a law forcing the government to give taxpayers a break?

This supposes, again, that the two situations are equivalent. Despite the efforts to hype these customers as victims, they in fact are scoundrels: they are demanding free money. There's no wonder the NDP are rushing to their defense: people bad at managing finances wanting free money are a natural voting bloc they take great pains to coddle.

Here's basically what happens when you show up at a payday lending company: (figures are from this paper)

This demolishes the myth that these evil companies are just preying on poor folks who have no other option. For one thing, you actually have to walk into the door to get a payday loan (imagine never having to pay taxes if you never entered a federal government building). For another, the poor guy running the store has to give up money in his pocket in order to give money to the vagabond off the street, and then incur even more costs having to track these people down and take them to court. Check out this reddit post from a pathetic loser who can't believe that these bastards actually expect him to pay back the money they gave him. He borrowed $500, didn't pay it, and now they want $1350. He's contemplating fighting it in court or even no-showing and going on the lamb. This is the "victim" being "preyed" upon by the paydown loan companies: a guy who got some money that he now doesn't think he needs to pay back. [again, big surprise this person would then think to complain to a socialist and demand regulation... -ed].

1. If payday lending is so profitable, why isn’t everybody doing it? This is a good question to ask yourself anytime you hear a story about some company earning unusually high profits off the back of a vulnerable population. If investors could earn a 200% rate of return by investing in new payday lending operations, why are smart investors wasting their time and money with anything else? Perhaps there’s something more to the picture that we’re not seeing?
2. Payday lending is not that profitable. Well, we don’t have to guess. People have studied this. And according to one study, the average profit earned by payday lenders was just 7.63%. By way of comparison, the same study reports that the average Starbucks franchise earns about 9% profit. So, if that 400% APR isn’t translating into sky-high profits for payday lenders, where exactly is it going?

Zwolinski wrote a paper in Business Ethics Journal Review on the topic, where he notes that the notion that "usury equals theft" is a backwards notion [again, no surprise coming from the NDP... -ed] that has been thoroughly discredited going back to the 19th century.

It's worth noting this because the left's entire case against payday lenders is purely a moral argument, and demolishing this anti-human notion is a key ingredient in stopping them. There's a non-moral argument available, of course, and it's a basic fact that the NDP and their ilk always ignore: the law of unintended consequences. First, Georgia, 2007:

If large numbers of poor people in need of short term liquidity find they will no longer be able to access it, the likelihood is that we will see an increase in the poorest people being unable to meet their bills and pay for services they need.

This not an entirely theoretical example; a 2007 federal reserve study showed that when the state of Georgia regulated pay day loan industries out of the state, consumers “bounced more checks” and “filed for bankruptcy at a higher rate”. An official study in 2010 concluded that pay day lenders provided a useful service covering gaps in the market.

Four years ago, Virginia lawmakers cracked down on payday lending. They limited borrowers to one payday loan at a time, and doubled the length of time they had to pay the money back. It worked. Payday loans plunged more than 80 percent. A few lenders left the state completely.

But it also didn’t work. The reforms created a vacuum being filled by a new form of short-term lending: car-title loans.

In a payday loan, the borrower writes a post-dated check to cover the loan amount, plus fees. In a car-title loan, the borrower puts up a vehicle as collateral. Since 2010 the number of car-title lending companies in Virginia has more than doubled. Last year, they made more than 128,000 loans, worth an aggregate $125 million. They also repossessed nearly 8,400 vehicles.

What will private enterprise come up with in Alberta once they are banned from being profitable with their current business model? Will they come up with a clever equally profitable business model as in Virginia? Or will they go the Georgia route, and instead see a new demand on the NDP next year to demand electricity stay on when they can't pay their bill, or force other institutions to lend them money even when the underwriting tables tell them not to?‡ It's hard to say...as Hayek said, the fatal conceit is deciding ahead of time what people will do when the market -- not retarded NDP MLAs -- has the relevant wealth of information required to calculate it.

So what we're looking at here is a "problem" that doesn't actually exist. It doesn't exist in a moral sense of "ridiculous profits" being racked up while "victimizing the poor". It doesn't exist in a technical sense of "we can stop this and make things better for people". It's an emotionally-charged debate devoid of reason and common sense: a call for "something aught to be done" when nothing aught to be done. It's cheap political pandering.

It's the NDP at work. A reminder to all Albertans: buy a gun. Buy lots of guns. Be prepared to use them.

The NDP are declaring war against a legitimate business. Next they might turn their (metaphorical) guns on you. It's better to have (literal) guns to point back at them.

† A Conservative government runs up some debt so the media stops calling them heartless every time they make the slightest of cuts. Then a Liberal government runs up huge debts claiming they have to "make up for" the "brutal" cuts the media lied about in relation to the Conservatives. Voters get sick of the Liberal debt and bring in Conservatives to fix it...‡ Don't laugh, either. The former was temporarily instituted in Ontario (by Conservatives!) in 2003 and the latter of course is how Bill Clinton caused the 2008 financial crisis. Unintended consequences, man.